A consortium of independent US broker-dealers, Mahogany Partners, has asked agency broker and technology provider ConvergEx to build a suite of electronic trading products to enhance its members’ block trading capabilities.
ConvergEx will start the project by developing “advanced blotter polling tools” that will enable Mahogany’s members to access external block liquidity as well as electronically cross block trades among themselves. The planned anonymous blotter polling functionality – which will be the first to be made available to independent floor brokers at the New York Stock Exchange (NYSE) – will be accessible to Mahogany members through an aggregated user interface.
The blotter polling function automatically searches the order and execution management systems of the brokers’ participating buy-side clients for liquidity, which is then aggregated electronically into blocks. This means the tool effectively acts as an electronic NYSE specialist.
“The consortium members want to accomplish two key goals with ConvergEx,” Andrew Levine, managing director at ConvergEx, told theTRADEnews.com. “The first is to build a technology that will allow them to communicate and cross more effectively with each other. The second is to give them the ability, though the blotter poll, to show their liquidity to and access liquidity from the buy-side institutions they normally represent.”
ConvergEx plans to offer further block-crossing solutions to the consortium through the aggregated user interface that will be announced “in the coming months”, according to Andrew Levine, managing director at ConvergEx. “We think the technology is a great way to create a workflow that will help bring back block trading to the floor of the exchange,” Levine said.
Mahogany is a consortium of US independent mid-tier, broker-dealers that facilitate access to anonymous block trading venues via technology, including order aggregation networks, and strategic alliances with firms such as BlockCross, a buy-side focused block trading platform operated by US broker Pulse Trading. “Mahogany was formed for this very purpose of finding creative ways to produce sophisticated approaches to facilitate block trading and enhance trading performance,” said Gregory Johnston, chief executive officer of Mahogany. “ConvergEx’s deep experience and proven track record of implementing intricate trading systems made them a natural selection to build these technologies for us.”
ConvergEx has based the block crossing tools it is offering to Mahogany on proprietary solutions it has developed for its own operations. “We have taken a technology that we have used in-house for our own program desks, sales desks and electronic clients and we have made it portable into a solution for a new client base,” aid Levine.
ConvergEx also confirmed the completion of its acquisition of the assets of Cogent Consulting, the US-based provider of commission management, broker voting and third-party payment solutions for institutional investors and broker-dealers.